Ted Baker is set to close 15 UK stores and cut some head office roles, as administrators take action to try to save the fashion brand.
Although landlords have served notice on four of those sites, the others were loss-making stores that the administrators deemed to have “no prospect of being returned to profitability, even with material rent reductions”.
They said the closures were a “constructive and necessary step in ensuring the business can deliver a profitable trading performance in the future”.
But how did a brand that less than 10 years ago was a perennial overperformer, end up in this position? Retail Gazette takes a closer look at what went wrong at Ted Baker.
Short term strife
Ted Baker’s UK operator No Ordinary Designer Label (NODL) filed a notice to appoint Teneo as administrators last month. NODL licenses the brand in the UK and Europe from Authentic Brands Group (ABG), the brand management group which owns Reebok, Forever 21 and David Beckham which bought Ted Baker for £211m just 18 months ago.
ABG said that NODL had ended up with “a significant level of arrears” run up under AARC, the Dutch firm it had hired to run Ted Baker’s stores and ecommerce operations in the UK and Europe.
Despite ABG providing AARC with a short-term loan back in October to put it on stable footing amid financial struggles at the firm, it terminated its relationship with the business in February as it said AARC had “consistently failed to inject promised funding into the business and meet its financial obligations”.
ABG chief strategy and transition officer John McNamara said: “Despite our tireless efforts, the damage done during a period under AARC in which NODL built up a significant level of arrears was too much to overcome. We wish that there could have been a better outcome for the Ted Baker employees and stakeholders.”
Longer term decline
The recent wrangling with licensees has clearly hit the business, but Ted Baker – which a decade ago was one of the UK’s top performing fashion brands – has been on a downward trajectory for some time.
Savvy Marketing CEO Catherine Shuttleworth says there are a few factors behind this, citing the “softening” of consumer spending on clothing, the shift towards casual attire amid remote working, and the demise of the department store.
She notes that through department store concessions shoppers would have had easy access to Ted Baker in places like Debenhams, which have now disappeared.
But the brand’s problems predate Debenhams’ demise in 2020.
The onset of Ted Baker’s struggles coincide with the resignation of its founder and former CEO Ray Kelvin back in 2019, who stepped down after widespread allegations of misconduct that including ‘forced hugging’ of staff.
Kelvin had built Ted Baker based on a debonair fictitious character, which he saw as an extension of himself. In fact, his business card carried the words “closest man to Ted”.
Following his sudden departure, Ted Baker’s good run came to an end as a string of profit warnings and accounting mishaps hit the brand along with a flurry of changes within its leadership team.
Shuttleworth says Kelvin was “the heartbeat of the business” and adds that a brand like Ted Baker needs “either a founder or someone with a founder mentality who really understands the brand”.
His departure “weakened” the business and while that might have been manageable in a buoyant market, Shuttleworth points out that since then it has been trading in an environment where “only the strong survive, and I just don’t think it was operating from a position of strength”.
Keeping up with the times
Unlike rivals such as Reiss, which has strived to modernise and update its fashion offer, Ted Baker has struggled to evolve.
“I don’t think the range moved on particularly. You need innovation and newness in brands like Ted Baker,” says Shuttleworth.
While the formalwear market has changed post-Covid, she notes that there has been a “real return” to celebrating events such as Christmas parties, weddings and days out at the races.
“People are craving experiences where they can dress up, but it doesn’t feel to me like it’s necessarily made the most of those opportunities.”
Shuttleworth also points out that it has also not moved with the times in terms of marketing.
“I wouldn’t say it’s got a very strong social presence”, she says.
While the retailer boasts an impressive 1.4m followers on Instagram, its engagement averages an incredibly low 5 comments per post, leaving it lagging behind rivals that are sucessfully using social media to target new audiences and remain relevant.
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“It’s very important now for clothing brands to have a very strong social presence and target consumers, particularly when more and more people are browsing clothing online.”
She calls having a social shopping strategy “critical for a brand like Ted Baker”.
Does Ted Baker have a future?
While the future of Ted Baker’s European operations hangs in the balance, it could still live to see another day.
Joint administrator Benji Dymant said today that ABG “continues to progress discussions with potential UK and European operating partners for the Ted Baker brand to bring the business back to health”.
Inevitably two familiar retail names have been mentioned in the form of Next and Frasers.
Next boss Lord Wolfson remained tight-lipped about the prospect when questioned by journalists last month, simply stating that it had “lots and lots of ongoing conversations with lots of potential equity partners”, it is an acquisition that would make sense.
GlobalData apparel analyst Louise Deglise-Favre says: “Next seems to be the best placed to take over Ted Baker, given it already has a licensing agreement with the brand on childrenswear, lingerie and nightwear.”
“While Ted Baker is not at the forefront of consumers’ minds anymore, it still is a well-know British brand with a solid heritage, which could add value to Next’s proposition if it manages to turn its fortunes around.”
Shuttleworth notes that integrating Ted Baker onto a platform like Next or Frasers “puts the brand front of millions of consumers who are in that market who can immediately buy from you because they already either have an account or a trading relationship with you”.
Returning to former glory
Whoever does takeover Ted Baker needs to reimagine the brand for today’s consumer, says Shuttleworth, who argues that it has not moved on over the past decade.
Deglise-Favre agrees that Ted Baker’s product “not being aligned with consumers’ preferences and needs” was a contributing factor to its demise and says that “rejuvenating the product offering towards more casual styles will be key in turning the brand’s fortunes around”.
“It could take inspiration from other premium brands within the segment which are thriving such as Nobody’s Child and Rixo,” she says.
While some may have seen the writing on the wall at Ted Baker for some time, it is still a brand that holds a special place for some shoppers and in the right hands its story could still have a happy ending.
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